Author Question: What are the implications for economic growth for countries specializing in capital goods rather ... (Read 110 times)

BrownTown3 · **on:** Jun 29, 2018

What are the implications for economic growth for countries specializing in capital goods rather than consumer goods? What is the opportunity cost of this decision?

What will be an ideal response?

Question 2

Refer to Figure 4-3. What area represents consumer surplus at P2?

A) A + B B) A + B + D + E C) B + C D) A

Benayers · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

All else equal, countries that specialize in capital goods will likely grow more than those that specialize in consumer goods, because specializing in capital goods will allow for more goods to be produced in the future. The opportunity cost of this decision is that the economy will experience a lower standard of living in the present than they would otherwise.

Answer to Question 2

D